Government to revisit central power pool

Union Power Minister Piyush Goyal said the Union government would rework the formula on electricity allocation from the central pool to states. He said the pool had become irrelevant with the availability of surplus power at cheaper rates.

Speaking to journalists at a conference of state ministers of power, renewable energy and mines, Goyal said, “The central government did power allocation like lord and master.” Power from generating stations, set up by central government utilities, goes to beneficiary states or Union territories (UTs) under guidelines issued in April 2000.

According to these, allocation is made to the States/UTs in two parts, a firm component of 85 per cent and an unallocated 15 per cent for urgent requirement. The firm allocation comprises allocation of 12 per cent free power to affected states and one per cent for local area development in the case of hydropower stations and 10 per cent (not free) power to the home state in the case of thermal and nuclear power stations. The balance 7275 per cent is distributed among states/UTs of a region in accordance with the pattern of central plan assistance and energy consumption during the previous five years, both having equal weight.

Central plan assistance is determined by what is termed the ‘Gadgil formula’, in which population of a state is taken into consideration. In the case of joint venture projects, the equity contributing state gets a benefit in firm allocation, in line with the contribution. Goyal also said states which did not allow nuclear power plants to be set up would not be given nuclear power from any other state.

On distressed power projects, Goyal said for resolution of the non-performing assets of banks, power purchase agreements cannot be floated. “I cannot burden the distribution companies.”